Lo­cal Canada takes soft­wood dis­pute to ap­peal panel

The Prince George Citizen - - FRONT PAGE - Mia RABSON

OT­TAWA — Canada is turn­ing to the North Amer­i­can Free Trade Agree­ment in its bid to stop U.S. du­ties on Cana­dian soft­wood lum­ber.

A let­ter from a Cana­dian lawyer was hand-de­liv­ered Tues­day to the Amer­i­can NAFTA sec­re­tar­iat in Wash­ing­ton, re­quest­ing a panel re­view “in re­gard to the fi­nal de­ter­mi­na­tion of the U.S. Depart­ment of Com­merce in the coun­ter­vail­ing duty in­ves­ti­ga­tion of soft­wood lum­ber from Canada.”

In a writ­ten state­ment, For­eign Af­fairs Min­is­ter Chrys­tia Free­land said Canada will “force­fully de­fend Canada’s soft­wood lum­ber in­dus­try.”

“The U.S. Depart­ment of Com­merce’s de­ci­sion on puni­tive coun­ter­vail­ing and anti-dump­ing du­ties against Canada’s soft­wood lum­ber pro­duc­ers is un­fair, un­war­ranted, and deeply trou­bling,” she said.

The chal­lenge comes un­der sec­tion 19 of NAFTA, one of the sec­tions in the crosshairs of U.S. Pres­i­dent Don­ald Trump as the tri­lat­eral trade pact is rene­go­ti­ated.

Cana­dian soft­wood lum­ber pro­duc­ers have al­ready laid down about $500 mil­lion in coun­ter­vail­ing and an­tidump­ing du­ties since the U.S. Depart­ment of Com­merce ruled last spring Canada was un­fairly sub­si­diz­ing its soft­wood in­dus­try and sell­ing wood into the U.S. at un­fairly low rates.

The main is­sues stem from the fact that most Cana­dian soft­wood is on Crown land and pro­duc­ers pay stumpage fees, set by provin­cial govern­ments, for the right to har­vest the wood. The U.S. Lum­ber Coali­tion al­leges these fees are de­lib­er­ately set too low and rep­re­sent an un­fair sub­sidy to Cana­dian pro­duc­ers.

Canada vig­or­ously de­nies these claims and has won sev­eral NAFTA chal­lenges over sim­i­lar soft­wood is­sues in the past.

Ear­lier this month, the U.S. gov­ern­ment made fi­nal de­ci­sions about the amount of duty that would be charged on Cana­dian soft­wood, with the fi­nal to­tal av­er­ag­ing about 21 per cent, down from al­most 27 per cent in the ini­tial de­ci­sions.

Canada and the U.S. have bat­tled over soft­wood for decades and the dis­putes have been be­fore both NAFTA and the World Trade Or­ga­ni­za­tion mul­ti­ple times. Canada has won al­most all of those chal­lenges, and even in cases where Canada was found to be sub­si­diz­ing its in­dus­try, NAFTA pan­els or the WTO have said the sub­sidy was so min­i­mal it had no ef­fect on U.S. pro­duc­ers.

Nat­u­ral Re­sources Min­is­ter Jim Carr has re­peat­edly said Canada has ev­ery rea­son to be­lieve it would pre­vail in such a chal­lenge again.

How­ever, un­til Tues­day it wasn’t clear whether Canada would take that route again in the midst of dif­fi­cult NAFTA rene­go­ti­a­tions, par­tic­u­larly given the Amer­i­can ob­jec­tive to elim­i­nate Chap­ter 19 al­to­gether.

Chap­ter 19 es­tab­lishes a panel of five ar­biters, agreed upon by both coun­tries, who will de­cide if the du­ties meet U.S. law. With­out that mech­a­nism, Canada would have to use the U.S. court sys­tem to make such a chal­lenge.

Canada likes Chap­ter 19 be­cause it doesn’t trust the U.S. courts to be fair and timely in re­view­ing in­ter­na­tional trade chal­lenges. The Trump ad­min­is­tra­tion be­lieves the U.S. court sys­tem should de­ter­mine if Amer­i­can laws are be­ing prop­erly ap­plied; if the panel de­cides they aren’t, the U.S. would have to re­fund the money col­lected.

Canada and the United States are at­tempt­ing to ne­go­ti­ate a new soft­wood deal that would dic­tate how much wood Canada can sell to the U.S. The last deal ex­pired two years ago.

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